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Tuesday, 9 September 2014

Somethings got to give: Mr Martoma’s Family Cannot Bear Burden Alone

In all sense of U.S. Justice Mathew Martoma CANNOT BE SERIOUSLY given
nine years prison sentence for his insider trading securities fraud when the man
Steven A. Cohen and his eponymous firm S.A.C. Capital that he committed these
crimes for walks free after grease-palming the justice system of the Americas! “Something
surely gotta give!”, seems an appropriate declaration to suggest that this is NOT
THE END of the SAC-saga. A saga very much degraded as much as it was chronicled
by institutionally pandering mainstream financial press; but veritably recorded
and actively disseminated by Fund Portfolio Management –FPM. Principals at FPM
have focused on insider trading protagonists at SAC Capital, and its reputationally
smeared investor Blackstone Group under our “No Smoke Without Fire: Of
Reputation Risk”. See our first blog post “No
Smoke Without Fire!”.

Mr Martoma must be utterly devastated and wholly indignant with the
penultimate outcome (he is naturally appealing the sentence!), after
multi-years judicial proceedings. And it is that bitter emotion and pervasive discontent feeling that should consume
him inside-out through the sentence appeal and ultimately towards righteous and
natural justice prevailing in the end. No! FPM are not evangelical preachers,
but as an aspiring and integral high priest class of financial investments.

For integral justice to prevail and for restoration of real ‘animal
spirits’ i.e. confidence (as opposed to smokescreen and mirror tricks of
pump-&-priming from QE et al) in the crooked financial and judicial systems
are vivid evidence of enforcement and
punishment for wrongdoing. Mr Martoma should cut a deal with prosecutors
towards humbling beyond-everyday-justice billionaire Mr Cohen. FPM are heeded from
our previous announcement in early June via a post entitled “The
Calm Before The Storm: SAC Takeaways – Part 1”:

“…Mathew
Martoma’s sentencing could yet herald a
fault line of tremors for Mr Cohen personally and set a precedent for the
hedge fund industry…

…FPM expects the severity of the
formulaic and deterrent-message in the sentencing
to be significantly monumental……additionally, to induce Mr Martoma to co-operate with
US prosecutors given the 6-8 years sentencing we expect...

Mr Martoma would proffer the
main cull for the baying public anger and show some moral rectitude rather than
be the sacrificial lamb for Mr Cohen.”

That Judge Paul G. Gardephe exceeded sentencing guidelines of
the U.S. Government’s probation department DOES INDEED send a signal to
would-be corrupters of the capital market integrity. However, the message is largely
diluted because the head of
“web-of-securities-fraud” Mr Cohen has evaded ANY sort of punishment.
Americans used to say the “The Buck stops here!”; if blame is not laid at the
helm of S.A.C. Capital then the message of the severe sentence, full
confiscation and its exemplification suggests “don’t get caught if you cheat”
or worse still, “don’t cheat unless you can afford it”. The old English adage
that has gotten corrupted by revisionist colonists reacting to
“chip-on-shoulder” syndrome, with incorrigible migration from developing
nations, is “If you can’t do the time don’t
do the crime!”

The risk of getting caught is
increasingly seen as “cost of doing
business”, yet hedge funds and banks do not set aside capital for ‘risqué
practices’, though executive heads knowingly and publically take “the
three-wise-monkeys” attitude. In FPM’s “NSWF:
Of Reputation Risk” enterprise this is one of the hedge fund due diligence aspects
of operational affairs. Judge Gardephe aptly sensing that any financial
confiscation from Mr Martoma via forfeitures
would be reimbursed by Mr Cohen, has accordingly set a high watermark in
sentencing. Philosophically speaking, can Mr Cohen compensate Mr Martoma, his
beautiful wife Rosemary (one for Mr Martoma's wall!), and their three children for a father and his 9 years’
absence from family?

Mathew's Martoma Beautiful Wife

This above article is FPM integral views on capital market for the new
millennia. Please contact kks@fundportfoliomanagement.com
for advisory services on our “NSWF: Of Reputation Risk” enterprise.